Margin of Safety Ratio (MOSR)

Posted in Finance, Accounting and Economics Terms, Total Reads: 1166

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Definition: Margin of Safety Ratio (MOSR)

Margin of safety is the extent over which the budgeted or actual sales exceed the break-even sales. In break-even analysis, it can be simply put as the difference between actual sales and break-even sales.

It denotes the extent to which the sales can drop before a company starts incurring losses. Also, the higher the margin of safety is, the lower is the risk of sales breaking even and higher is the profit.